Insiders at the companies have pointed out that the reporting was not co-ordinated with any larger goal in mind, and the releases don’t overlap. Viacom will be out before the start of trading, with CBS following after the close, and toward the end of earnings season, which unofficially kicks off on Wednesday with Netflix.
Even so, the closely timed Wall Street events are slated to occur in the context of merger discussions between the two companies, which are controlled by the same shareholder, National Amusements. Talks officially commenced a few weeks ago, the third foray in the past four years.
When and if a deal can be consummated remains unclear, though a reunion has long been seen as a foregone conclusion, with the main variables being price and management. But some of the factors that complicated the initial talks in 2016 and the sequel in 2018 have been notably absent as the parties have spent the past several weeks in discussions. The biggest obstacle no longer in place is former CBS CEO Les Moonves, who had clashed with National Amusements chief Shari Redstone over the make-up of the management team. She favored Viacom CEO Bob Bakish to be lieutenant to Moonves, whereas Joe Ianniello, currently acting CEO of CBS, was preferred by Moonves.
After accusations of sexual misconduct by at least a dozen women, Moonves was ousted as CEO in September 2018. Ianniello, who has impressed many Wall Streeters with his stewardship of the company in a difficult climate, had his contract extended to the end of 2019 and a search for a full-time CEO was suspended. That signals the disposition toward the companies returning to the same corporate fold, as they were from 2000 to 2006. In a Disney-Fox, AT&T-Time Warner, tech-squeezed media landscape, most observers and stakeholders say, the sooner the better.
Both companies have entered the current negotiations in different shape from where they were three years ago, when talks gained more urgency. From a stock standpoint, a deal could be a tonic and many analysts have emphasized the “overhang” of the merger question and their eagerness for it to be dispelled.
CBS shares have fluctuated a fair amount, but as of Monday’s close at $53.37 are at essentially the same level where they were in mid-2016. Viacom, whose narrative in 2016 was one of struggling to emerge from corporate dysfunction and the epic power struggle between former CEO Philippe Dauman and chairman emeritus Sumner Redstone, has regained equilibrium. Viacom shares ($31.73 as of Monday) are also about even with their mid-2016 level, with bulls crediting Bakish with several turnaround moves in addition to generally calming the waters.
On August 8, investors will be watching the ratings and advertising stories at both companies given ongoing headwinds in linear programming, while also looking for reason for hope in the streaming realm. Neither company is placing go-for-broke bets in the manner of Disney or WarnerMedia in pursuit of Netflix, but both have asserted themselves in the digital arena.
CBS has continued to nurture CBS All Access and Showtime streaming, striking deals to add both to the warehouse of apps at Apple TV+, which is one reason the company is confident projecting 25 million combined subscribers by 2022. It also has held talks with Lionsgate about acquiring Starz, which could add even more ammunition given Starz’s steadily scaling streaming operation.
Viacom, while it has some targeted subscription offerings, such as a soon-to-launch BET effort in partnership with Tyler Perry, is mainly focused on ad-supported streaming. Last January, the company paid $340 million for PlutoTV, a leading ad-supported streaming outlet.